2. Economics
3. suppose that the demand and supply functions for good x...

# Question: suppose that the demand and supply functions for good x...

###### Question details
1. Suppose that the demand and supply functions for good X are

Qd = 56 – 2PX + 0.01M +7PR

Qs = -600 + 10PX

Where PX is the sales price of good X, M is average consumer income, PR is the price of a related good.

1. Is good X a normal or inferior good?
2. Are good X and R complements of substitutes? Explain?

Suppose M = $50,000 and PR =$20
3. What is the direct demand function for good X?
4. What is the equilibrium price and quantity?
5. What is the market outcome if M rises to $60,000, other things being equal? 6. What is the market outcome if price is of good PR is decreases to$14 other things being equal (M= \$50,000?
7. What happens to equilibrium price and quantity if the supply function becomes QS = - 360 + 10PX, for the original demand function and the original values for M and PR?